FTSE Women Leaders Review: the findings and recommendations

This time last year, it was revealed that FTSE 350 companies had hit the target of 40% female representation on boards, three years ahead of the target date. The publication of this year’s FTSE Women Leaders Review (the Review) on 27 February 2024 was therefore very eagerly anticipated, to assess what further progress has been made over the past 12 months. 

This Review is part of the third and successor phase to the Davies Review, which first challenged the FTSE to increase female representation on boards to 25% back in 2010, and subsequently the Hampton-Alexander Review, which increased that target to 33%. This year, the Review continues to monitor gender balance, refreshing the focus on female representation on boards and in senior leadership positions.  

The Review’s findings

FTSE companies

The overall picture presented by the Review is relatively positive, although noting it follows from a very positive year in 2022. Key highlights from the Review include:

• female representation on boards stands at an average of 42.6% across the FTSE 100, 41.8% across the FTSE 250 and 42.1% for the FTSE 350 overall, which is an all-time high for women on the boards of the biggest, public-listed companies;
• female representation in leadership roles (a wider pool than the board, covering executive committee roles and direct reports to those roles) has risen to 35.2% across the FTSE 100 and 33.9% across the FTSE 250; 
• progress in the Senior Independent Director (SID) role has been strong since 2017, culminating in a 47% near-parity for women SIDs this year; and
• there are only two companies left on the FTSE 250 with “one and done” boards (a phrase used to describe the appointment of a single ‘token’ woman to a board). This is a significant decrease from the 74 “one and done” boards at the end of 2018 when the Review began.

While the progress on the SID role outlined in the third point above is to be celebrated, the Review’s leaders have flagged the importance of monitoring that the SID role does not become an implicit pre-requisite for female candidates wanting to become Chair, while male candidates proceed straight to the role of Chair.  It will obviously also be important to monitor whether the SID role is viewed as an easier alternative than the Chair role in terms of satisfying the Review’s target (of one of the four core roles (Chair, SID, CEO and CFO) being filled by a woman). 

The latest gains reported in the Review are against the backdrop of (i) an overall reduction in the executive committee roles and direct reports population for the second year in a row, and (ii) a lower candidate turnover, making the gains particularly welcome news. 

These positive results mean the UK’s board-related gender balance continues to compare well internationally, sitting second behind France and ahead of Norway in third. Both France and Norway use a quota system to ensure female representation in top business roles, whereas the Review is a voluntary, independent and business-led initiative, supported by the UK Government. The UK comparison pool is also significantly larger than the other countries filling the top five spots for female representation. With 350 public-listed companies and almost 3000 board seats in scope, the scale of the UK assessment is three times larger than that in Australia, the next largest country pool in the top five. 

Top 50 Private Companies 

This year’s Review is the second in which the UK’s top 50 private entities (as determined by annual turnover, workforce size, and contribution to UK business and the economy) have been invited to take part. 

Of the 46 companies willing to take part, female representation on boards has remained flat since last year at around 31%, while female representation in leadership has risen to an average of 36%. Comparatively, the 46 private companies are performing marginally better that their FTSE counterparts in the broader female representation in leadership category, but are falling behind when it comes to female representation on boards. 

The headline figures in the Review provide an average of the diversity statistics across the companies in a particular category; delving into the detail on an individual company basis reveals a wide spectrum of female representation. In particular, the private companies tend to be more polarised on female representation compared to the FTSE companies, with statistics on women in leadership roles ranging widely from 62% to 14%. It is also important to remember that, although the 40% target of women on boards across the FTSE 350 has been met, at an individual company level there are still some outliers – including 29 companies (four of them in the FTSE 100) which have not yet hit the previous 33% female representation on boards.

Areas for improvement 

Despite the continued progress, there is still much to improve. In particular, the Review highlights: 

• the number of female CEOs remains flat (and extremely low), with marginal gains balanced by losses elsewhere across the FTSE 350;
• there was a small net loss in the number of female Chairs, with appointments offset by more women Chairs stepping down;
• the appointment rate of women into leadership roles has remained static compared to last year, with 59% of all available roles going to men;
• in FTSE 100 leadership positions, women seem to be siloed into specific roles: 71% of HR Directors and 56% of Company Secretaries are women, yet only 25% of Finance Directors and 27% of Chief Information Officers are women; and
• there have recently been a number of competing voices, including disappointing perspectives that progress for women has 'gone far enough'. 

Relating to the first and fourth points above, the roles that seem to be filled predominantly by women (such as the HR Director and Company Secretary) are not roles that have historically produced CEOs. The overwhelming majority of CEOs come from ‘traditional roles’, a key one being Finance Director, a role which is still male dominated. The number of female CEOs would likely be lifted in the long run as result of more women being hired in the traditional pipeline roles and opening up CEO positions to those from ‘non-traditional’ routes, such as former HR Directors.

What is next? 

To continue to see real progress on senior female representation, the Review sets out four recommendations:

1. Securing the 40% board and leadership target: the current voluntary target for FTSE 350 boards and leadership remains at 40% female representation. To maintain gender balance over time, and provide a degree of flexibility, the Review recommends that companies should aim to maintain the representation of both men and women at, or above, a minimum 40% threshold.
2. Focusing on the most senior roles: FTSE 350 companies should have at least one woman in the Chair or SID role on the board, and/or one woman in the CEO or Finance Director role by the end of 2025. 
3. Encouraging FTSE 350 companies that have fallen behind: the investment community and corporate governance agencies should encourage any FTSE 350 board that has not yet achieved the 33% target for 2020, to do so. In addition, FTSE 350 boards below 33% women should look to women when considering additional appointments.
4. Engaging a wider spectrum of business: the inclusion of the largest 50 private companies in the UK is intended to provide consistency across the UK’s largest businesses and drive further progress across British business.

In the panel discussion held as part of the launch of the Review, the speakers indicated that inter-sectionality will become an increasingly important topic to ensure opportunities are shared amongst a diverse group of women. 

While progress has been made this year, which should be celebrated, there is still much to be done in terms of boardroom gender diversity. Companies may need to alter their fundamental culture and ethos to encourage greater diversity, together with day-to-day practical changes to ensure the above targets are translated into tangible results.